Press Release

HOUSTON, March 29, 2019 (GLOBE NEWSWIRE) -- Harvest Oil & Gas Corp. (OTCQX: HRST) (“Harvest” or the “Company”) today announced results for the fourth quarter and full year of 2018 and the filing of its Form 10-K with the Securities and Exchange Commission (“SEC”). In addition, Harvest announced its 2018 year-end proved reserves and provided guidance for 2019.

Key Highlights

Average daily production was 144.9 MMcfe for the fourth quarter of 2018, which was in line with guidance of 143 to 150 MMcfe

Sold all of Harvest’s 4.2 million shares of Magnolia Oil & Gas Corporation (NYSE: MGY) stock for net proceeds of $51.7 million in January 2019

Sold oil and gas properties in Central Texas for total consideration of $2.6 million in December 2018

Sold oil and gas properties in the Mid-Continent area for total consideration of $2.7 million in December 2018 and January 2019

In February 2019, entered into definitive agreements to sell oil and gas properties in the San Juan Basin in New Mexico and Colorado for $42.8 million in cash and in the Mid-Continent area for $2.5 million in cash, each subject to purchase price adjustments

Reduced outstanding borrowings under the credit facility to $55 million, as of March 28, 2019

Fourth Quarter 2018 Results

Fourth Quarter

Third Quarter

$ in millions unless noted otherwise

2018

2018

Average daily production (MMcfe/d)

144.9

175.5

Total revenues (1)

47.9

69.0

Total assets (2)

534.5

545.5

Net income (loss) (1)(3)

34.3

(9.8

)

Adjusted EBITDAX (a non-GAAP

financial measure) (1)(4)

9.0

28.9

Total debt (2)

115.0

133.0

Net cash provided by operating activities

19.6

17.4

Additions to oil and natural gas properties (5)

5.1

15.1

Includes royalty adjustment of $5.0 million in the fourth quarter. See Note 13 of the Notes to Consolidated Financial Statements included under “Item 8. Financial Statements and Supplementary Data” contained in the Form 10-K filed March 29, 2019. Excluding this royalty adjustment, for the fourth quarter, total revenue would have been $52.9 million, net income would have been $39.3 million and Adjusted EBITDAX would have been $14.0 million.

As of December 31, 2018 and September 30, 2018

Includes $0.5 million and $1.0 million of reorganization items, net, in fourth and third quarter of 2018, respectively

Adjusted EBITDAX is a non-GAAP financial measure and is described in the attached table under “Non-GAAP Measures”

Represents cash payments during the period

For the fourth quarter of 2018, Harvest reported net income of $34.3 million, or $3.41 per basic and diluted weighted average share outstanding, compared to a net loss of $40.3 million, or $(0.80) per basic and diluted weighted average limited partner unit outstanding, for the fourth quarter of 2017 reported by Harvest’s predecessor. For the third quarter of 2018, Harvest reported a net loss of $9.8 million, or $(0.97) per basic and diluted weighted average share outstanding. Included in 2018 fourth quarter net income were the following items:

$51.6 million of non-cash gains on commodity derivatives,

$16.0 million of non-cash losses on equity securities,

$5.0 million revenue decrease related to a royalty adjustment,

$0.7 million of gain on sales of oil and natural gas properties,

$0.5 million of reorganization items, net,

$0.5 million of impairment charges related to the sale of proved oil and natural gas properties located in Central Texas and Karnes County, Texas,

$0.1 million of non-cash costs contained in general and administrative expenses, and

$0.1 million of dry hole and exploration costs.

Production for the fourth quarter of 2018 was 9.0 Bcf of natural gas, 194 Mbbls of oil and 523 Mbbls of natural gas liquids (“NGLs”), or 144.9 million cubic feet equivalent per day (Mmcfe/day). This represents a 16 percent decrease from the fourth quarter of 2017 production of 172.1 Mmcfe/day and a 17 percent decrease from the third quarter of 2018 production of 175.5 Mmcfe/day. The decreases in production from the fourth quarter of 2017 and third quarter of 2018 were primarily due to the divestiture of the Central Texas and Karnes County, Texas properties that closed on August 31, 2018, partially offset by the adoption of new revenue recognition standards in 2018.

Adjusted EBITDAX for the fourth quarter of 2018 was $9.0 million, a 61 percent decrease from the fourth quarter of 2017 and a 69 percent decrease from the third quarter of 2018. The decrease in Adjusted EBITDAX from the fourth quarter of 2017 was primarily attributable to the divestiture of the Central Texas and Karnes County, Texas properties and a royalty adjustment, partially offset by a decrease in general and administrative expenses. The decrease in Adjusted EBITDAX from the third quarter of 2018 was primarily attributable to the divestiture of the Central Texas and Karnes County, Texas properties, a royalty adjustment and lower realized crude oil and natural gas liquids prices, partially offset by higher realized natural gas prices and a decrease in general and administrative expenses. Adjusted EBITDAX is a non-GAAP financial measure and is described in the attached table under “Non-GAAP Measures.”

Full Year 2018 Results

$ in millions unless noted otherwise

2018 (1)

2017

Average daily production (MMcfe/d)

170.5

170.7

Total revenues (2)

249.6

225.7

Total assets (3)

534.5

1,441.8

Net loss (2)(4)

(586.6

)

(134.2

)

Adjusted EBITDAX (a non-GAAP

financial measure) (2)(5)

92.0

83.7

Total debt (3)

115.0

605.5

Net cash provided by operating activities

67.2

31.7

Additions to oil and natural gas properties (6)

57.1

27.3

All amounts reflect the combined results of five months ended May 31, 2018 (Predecessor) and seven months ended December 31, 2018 (Successor)

Includes royalty adjustment of $5.0 million in 2018. See Note 13 of the Notes to Consolidated Financial Statements included under “Item 8. Financial Statements and Supplementary Data” contained in the Form 10-K filed March 29, 2019. Excluding this royalty adjustment, for 2018, total revenue would have been $254.6 million, net loss would have been $581.6 million and Adjusted EBITDAX would have been $97.0 million.

As of December 31, 2018 and 2017

Includes $589.6 million of reorganization items, net, in 2018

Adjusted EBITDAX is a non-GAAP financial measure and is described in the attached table under “Non-GAAP Measures”

Represents cash payments during the period

For 2018, Harvest reported a net loss of $586.6 million which reflects the combined results of the five months ended May 31, 2018 (Predecessor) and seven months ended December 31, 2018 (Successor). For 2017, Harvest’s predecessor reported a net loss of $134.2 million. Included in net loss for 2018 were the following items:

$589.6 million of reorganization items, net,

$20.1 million of non-cash gains on commodity and interest rate derivatives,

$11.1 million of non-cash losses on equity securities,

$5.0 million revenue decrease related to a royalty adjustment,

$3.1 million of impairment charges related to the sale of proved oil and natural gas properties located in Central Texas and Karnes County, Texas, and

$5.0 million of non-cash costs contained in general and administrative expenses.

Production for 2018 was 40.1 Bcf of natural gas, 1.3 Mmbbls of oil and 2.4 Mmbbls of natural gas liquids, or 170.5 Mmcfe/day, which is comparable to 2017 production of 170.7 Mmcfe/day.

Adjusted EBITDAX for 2018 was $92.0 million, a 10 percent increase as compared to 2017. The increase in Adjusted EBITDAX as compared to 2017 is primarily due to higher realized oil and natural gas liquids prices, partially offset by the divestiture of the Central Texas and Karnes County, Texas properties, a royalty adjustment and lower realized natural gas prices.

Fresh Start Accounting and Factors Affecting the Comparability of the Results

Upon emergence from Chapter 11 proceedings on June 4, 2018 Harvest adopted fresh start accounting as required by Generally Accepted Accounting Principles (“GAAP”). As a result of adopting fresh start accounting, the Company’s consolidated financial statements and certain presentations are separated into two distinct periods, the period before the convenience date of May 31, 2018 (labeled “Predecessor”) and the period after the convenience date (labeled “Successor”), to indicate the application of different basis of accounting between the periods presented. Despite the separate presentation, there was continuity of the Company’s operations.

The Company’s operating results are presented herein on a combined basis (i.e., by combining the results of the applicable Predecessor and Successor periods).The Company believes that describing certain year-over-year variances and trends in its results for the three months and years ended December 31, 2018 and 2017 without regard to the concept of Successor and Predecessor (i.e. on a combined basis) facilitates a meaningful analysis of the results of operations. These combined results are not considered to be prepared in accordance with GAAP and have not been prepared as pro forma results under applicable regulations. The combined operating results may not reflect the actual results the Company would have achieved absent its emergence from bankruptcy and may not be indicative of future results.

Revolving Credit Facility and Liquidity

As of March 28, 2019, the Company’s borrowing base under its credit facility was $260.3 million, of which $55 million was drawn. Liquidity from borrowing base capacity and cash on hand as of March 28, 2019 is over $210 million. Harvest's next semi-annual borrowing base redetermination is scheduled for April 2019.

For more information regarding Harvest's debt and liquidity, please review Harvest's Annual Report on Form 10-K filed on March 29, 2019, with the SEC.

Commodity Hedges

In 2019, Harvest entered into the following commodity hedges.

Swap

Swap

Period

Index

Volume

Price

Natural Gas (MmmBtus):

Jan - Dec 2020

NYMEX

16,470.0

$

2.70

In addition, in January 2019, Harvest terminated 167 MBls of oil swaps for the period of February 2019 to December 2019 at a fixed price of $62.12 and received a total of $1.5 million. Details regarding Harvest’s total current hedge position may be found in the Total Current Hedge Position table at the end of this press release.

Year-end 2018 Estimated Net Proved Reserves

Harvest’s year-end 2018 estimated net proved reserves were 712 Bcfe. Approximately 67 percent were natural gas, 25 percent were natural gas liquids and 8 percent were crude oil. As specified by the SEC, the prices for oil, natural gas and natural gas liquids were the average prices during the year determined using the price on the first day of each month. The prices utilized in calculating the Company’s total estimated proved reserves at December 31, 2018 were $65.56 per Bbl of oil and $3.10 per MMBtu of natural gas.

At December 31, 2018, our proved reserves had a standardized measure of discounted future net cash flows of $436.4 million and a present value of future net pre-tax cash flows attributable to estimated net proved reserves, discounted at 10 percent per annum (“PV-10”) of $509.6 million based on SEC pricing. PV–10, is a computation of the standardized measure of discounted future net cash flows on a pre–tax basis and is computed on the same basis as standardized measure but does not include a provision for federal income taxes, Texas gross margin tax or other state taxes. PV–10 is considered a non–GAAP financial measure under the regulations of the SEC. We believe PV–10 to be an important measure for evaluating the relative significance of our oil and natural gas properties. We further believe investors and creditors may utilize our PV–10 as a basis for comparison of the relative size and value of our reserves to other companies. PV–10, however, is not a substitute for the standardized measure. See the attached table under

“Non-GAAP Measures” for a reconciliation of standardized measure to PV-10. Our PV–10 measure and standardized measure do not purport to present the fair value of our reserves.

Estimated Net Proved Reserves (1)

Natural Gas

Crude Oil

Natural Gas

Equivalents

(MMBbls)

(Bcf)

NGLs (MMBbls)

(Bcfe)

Proved Reserves:

Developed

9.9

468.5

28.5

698.5

Undeveloped

—

8.2

0.8

13.4

Total

9.9

476.7

29.3

711.9

Since January 2019, Harvest has sold or entered into definitive agreements to sell all interests in the San Juan Basin representing 157.6 Bcfe and certain interests in the Mid-Continent area representing 9.5 Bcfe of our 2018 year-end proved reserves. Combined, the divestitures are considered 100% developed.

For comparative purposes, utilizing NYMEX forward closing prices for oil and natural gas at December 31, 2018 for January 1, 2019 through December 31, 2030, total proved reserves at December 31, 2018 were 694 Bcfe, with a PV–10 of $353 million, a decrease of 18 Bcfe versus SEC reserves and $157 million versus PV–10 using SEC prices. The unweighted average of the NYMEX strip prices used were $51.80 per Bbl of oil and $2.93 per MMBtu of natural gas. NYMEX forward strip-based proved reserves were calculated based on the SEC proved reserves estimation methodology, but applying NYMEX forward strip prices rather than SEC prices. We believe that investors and creditors may utilize our NYMEX strip-based PV-10 as a basis for comparison of the relative size and value of our reserves to other companies. The PV–10 of our NYMEX forward strip-based reserves is not a substitute for the standardized measure and does not purport to present the fair value of our reserves.

Guidance for 2019

The guidance table below assumes the San Juan and Mid-Continent divestitures close at the end of the first quarter (although the San Juan and Mid-Continent divestitures are expected to close at the beginning of April 2019). Therefore, the guidance for the second quarter through the fourth quarter excludes these assets.

Excludes non-cash general and administrative expense, of which non-cash share-based compensation is a part. Also excludes any amounts for divestiture or acquisition related due diligence and transaction costs.

Harvest’s financial statements and related footnotes are available in the 2018 Form 10-K, which was filed today and is available through the Investor Relations/SEC Filings section of the Harvest website at http://www.hvstog.com.

Investor Presentation

As announced on March 21 2019, an updated investor presentation will be posted to the Investor Relations section of the Harvest website on March 29, 2019.

Unitholders’ Schedule K-1

EV Energy Partners, L.P. (EVEP) unitholders’ Schedule K-1s for the 2018 tax year are available for download at https://www.taxpackagesupport.com/evenergy. For questions regarding their Schedule K-1, unitholders are invited to call the Tax Package Support helpline at 1-800-973-7551. Unitholders should consult their personal tax advisors regarding tax related questions unique to each unitholder.

About Harvest Oil & Gas Corp.

Harvest is an independent oil and gas company engaged in the efficient operation and development of onshore oil and gas properties in the continental United States. The Company’s assets consist primarily of producing and non-producing properties in the Barnett Shale, the San Juan Basin, the Appalachian Basin (which includes the Utica Shale), Michigan, the Mid-Continent areas in Oklahoma, Texas, Arkansas, Kansas and Louisiana, the Permian Basin and the Monroe Field in Northern Louisiana. More information about Harvest is available on the internet at https://www.hvstog.com.

Forward Looking Statements

This press release contains certain statements that are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends affecting the financial condition of its business. These forward-looking statements are subject to a number of risks and uncertainties, most of which are difficult to predict and many of which are beyond its control. Please read the Company’s filings with the Securities and Exchange Commission, including “Risk Factors” in its Annual Report on Form 10-K for the year ended December 31, 2018 and other public filings and press releases for a discussion of risks and uncertainties that could cause actual results to differ from those in such forward-looking statements. These risks include, but are not limited to, our inability to control our contract operator, EnerVest Operating, L.L.C., outside of the parameters of the Services Agreement, our ability to obtain needed capital or financing on satisfactory terms, fluctuations in prices of oil, natural gas and natural gas liquids and the length of time commodity prices remain depressed, our ability to maintain production levels through development drilling, risks associated with drilling and operating wells, the availability of drilling and production equipment, changes in applicable laws and regulations that adversely affect our operations and general economic conditions. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “plan,” “expect,” “indicate” and similar expressions are intended to identify forward-looking statements. All statements other than statements of current or historical fact contained in this press release are forward-looking statements. Although the Company believes that the forward-looking statements contained in this press release are based upon reasonable assumptions, the forward-looking events and circumstances discussed in this press release may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements.

You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise.

Operating Statistics

Successor

Predecessor

Three Months

Three Months

Ended

Ended

December 31,

December 31,

Production data:

2018

2017

Oil (MBbls)

194

370

Natural gas liquids (MBbls)

523

584

Natural gas (MMcf)

9,035

10,110

Net production (MMcfe)

13,334

15,833

Average sales price per unit: (1)

Oil (Bbl)

$

56.70

$

53.08

Natural gas liquids (Bbl) (2)

15.17

24.77

Natural gas (Mcf)

3.13

2.52

Mcfe (2)

3.54

3.76

Average unit cost per Mcfe:

Production costs:

Lease operating expenses

$

1.98

$

1.57

Production taxes

0.19

0.17

Total

2.17

1.74

Depreciation, depletion and amortization

0.41

1.69

General and administrative expenses

0.44

0.67

Prior to $4.0 million and $0.1 million of net hedge losses on settlements of commodity derivatives for the three months ended December 31, 2018 and 2017, respectively.

Includes the effects of a royalty adjustment of $5.0 million in the fourth quarter. See Note 13 of the Notes to Consolidated Financial Statements included under “Item 8. Financial Statements and Supplementary Data” contained in the Form 10-K filed March 29, 2019. Excluding this royalty adjustment, the average sales price for natural gas liquids for the fourth quarter would have been $24.74 per barrel and the average sales price per mcfe would have been $3.92.

Successor

Predecessor

Predecessor

Combined

Seven Months

Five Months

Year

Year

Ended

Ended

Ended

Ended

December 31,

May 31,

December 31,

December 31,

2018

2018

2018

2017

Production data:

Oil (MBbls)

642

662

1,304

1,387

Natural gas liquids (MBbls)

1,348

1,040

2,388

2,165

Natural gas (MMcf)

23,084

16,982

40,066

40,979

Net production (MMcfe)

35,029

27,193

62,222

62,293

Average sales price per unit: (1)

Oil (Bbl)

$

64.45

$

64.14

$

64.32

$

47.41

Natural gas liquids (Bbl) (2)

23.95

25.86

24.79

21.40

Natural gas (Mcf)

2.75

2.41

2.61

2.71

Mcfe (2)

3.92

4.06

3.98

3.58

Average unit cost per Mcfe:

Production costs:

Lease operating expenses

$

1.83

$

1.67

$

1.76

$

1.63

Production taxes

0.19

0.20

0.19

0.17

Total

2.02

1.87

1.95

1.80

Depreciation, depletion and amortization

0.46

1.70

1.00

1.56

General and administrative expenses

0.45

0.58

0.50

0.52

Prior to $4.3 million and $2.3 million of net hedge losses on settlements of commodity derivatives for the year ended December 31, 2018 and 2017, respectively.

Includes the effects of a royalty adjustment of $5.0 million in 2018. See Note 13 of the Notes to Consolidated Financial Statements included under “Item 8. Financial Statements and Supplementary Data” contained in the Form 10-K filed March 29, 2019. Excluding this royalty adjustment, for the seven months ended December 31, 2018, the average sales price for natural gas liquids would have been $27.66 per barrel and the average sales price per mcfe would have been $4.06, and for the combined year ended December 31, 2018, the average sales price for natural gas liquids would have been $26.88 per barrel and the average price per mcfe would have been $4.06.

Consolidated Balance Sheets($ in thousands, except number of shares/units)

Consolidated Statements of Operations($ in thousands, except per share/unit data)

Successor

Predecessor

Three Months

Three Months

Ended

Ended

December 31,

December 31,

2018

2017

Revenues:

Oil, natural gas and natural gas liquids revenues (1)

$

47,227

$

59,552

Transportation and marketing–related revenues

687

451

Total revenues (1)

47,914

60,003

Operating costs and expenses:

Lease operating expenses

26,444

24,809

Cost of purchased natural gas

504

315

Dry hole and exploration costs

113

223

Production taxes

2,539

2,760

Accretion expense on obligations

2,286

1,879

Depreciation, depletion and amortization

5,422

26,680

General and administrative expenses

5,924

10,659

Impairment of oil and natural gas properties

500

25,591

Gain on sales of oil and natural gas properties

(650

)

(70

)

Total operating costs and expenses

43,082

92,846

Operating income (loss)

4,832

(32,843

)

Other income (expense), net:

Gain on derivatives, net

47,617

2,266

Interest expense

(2,059

)

(10,402

)

Loss on equity securities

(15,960

)

—

Other income, net

458

557

Total other income (expense), net

30,056

(7,579

)

Reorganization items, net

(543

)

—

Income (loss) before income taxes

34,345

(40,422

)

Income tax (expense) benefit

(78

)

101

Net income (loss) (1)

$

34,267

$

(40,321

)

Basic and diluted earnings per share / unit:

Net income (loss)

$

3.41

$

(0.80

)

Weighted average common shares / units outstanding:

Basic

10,042

49,369

Diluted

10,047

49,369

Includes the effects of a royalty adjustment of $5.0 million in the three months ended December 31, 2018. See Note 13 of the Notes to Consolidated Financial Statements included under “Item 8. Financial Statements and Supplementary Data” contained in the Form 10-K filed March 29, 2019. Excluding this royalty adjustment, for the fourth quarter, total revenue would have been $52.9 million and net income would have been $39.3 million.

Successor

Predecessor

Predecessor

Combined

Seven Months

Five Months

Year

Year

Ended

Ended

Ended

Ended

December 31,

May 31,

December 31,

December 31,

2018

2018

2018

2017

Revenues:

Oil, natural gas and natural gas liquids revenues (1)

$

137,169

$

110,307

$

247,476

$

223,297

Transportation and marketing–related revenues

1,431

724

2,155

2,396

Total revenues (1)

138,600

111,031

249,631

225,693

Operating costs and expenses:

Lease operating expenses

64,100

45,372

109,472

101,591

Cost of purchased natural gas

1,026

557

1,583

1,699

Dry hole and exploration costs

177

122

299

413

Production taxes

6,482

5,343

11,825

10,588

Accretion expense on obligations

5,420

3,176

8,596

7,653

Depreciation, depletion and amortization

16,012

46,196

62,208

96,901

General and administrative expenses

15,626

15,648

31,274

32,290

Restructuring costs

—

5,211

5,211

—

Impairment of oil and natural gas properties

3,065

3

3,068

93,607

(Gain) loss on sales of oil and natural gas properties

(697

)

5

(692

)

(981

)

Total operating costs and expenses

111,211

121,633

232,844

343,761

Operating income (loss)

27,389

(10,602

)

16,787

(118,068

)

Other income (expense), net:

Gain on derivatives, net

16,962

444

17,406

22,854

Interest expense

(7,225

)

(13,652

)

(20,877

)

(40,903

)

Loss on equity securities

(11,130

)

—

(11,130

)

—

Other income, net

374

776

1,150

1,706

Total other income (expense), net

(1,019

)

(12,432

)

(13,451

)

(16,343

)

Reorganization items, net

(2,323

)

(587,325

)

(589,648

)

—

Income (loss) before income taxes

24,047

(610,359

)

(586,312

)

(134,411

)

Income tax (expense) benefit

(78

)

(166

)

(244

)

210

Net income (loss) (1)

$

23,969

$

(610,525

)

$

(586,556

)

$

(134,201

)

Basic and diluted earnings per share / unit:

Net income (loss)

$

2.39

$

(12.12

)

$

(2.66

)

Weighted average common shares / units outstanding:

Basic

10,030

49,369

49,357

Diluted

10,032

49,369

49,357

Includes the effects of a royalty adjustment of $5.0 million in the seven months ended December 31, 2018. See Note 13 of the Notes to Consolidated Financial Statements included under “Item 8. Financial Statements and Supplementary Data” contained in the Form 10-K filed March 29, 2019. Excluding this royalty adjustment, for the seven months ended December 31, 2018, total revenue would have been $143.6 million and net income would have been $29.0 million, and for the combined year ended December 31, 2018, total revenue would have been $254.6 million and net loss would have been $581.6 million.

Adjusted EBITDAX is used by the Company’s management to provide additional information and statistics relative to the performance of the business, including (prior to the creation of any reserves) the cash return on investment. The Company believes this financial measure may indicate to investors whether or not it is generating cash flow at a level that can support or sustain quarterly interest expense and capital expenditures. Adjusted EBITDAX should not be considered as an alternative to net income, operating income, cash flows from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDAX excludes some, but not all, items that affect net income and operating income, and this measure may vary among companies. Therefore, Harvest’s Adjusted EBITDAX may not be comparable to similarly titled measures of other companies.

Reconciliation of Net Income (Loss) to Adjusted EBITDAX($ in thousands)

Three Months Ended

Year Ended

Successor

Predecessor

Successor

Combined

Predecessor

Dec 31, 2018

Dec 31, 2017

Sep 30, 2018

Dec 31, 2018

Dec 31, 2017

Net income (loss) (1)

$

34,267

$

(40,321

)

$

(9,760

)

$

(586,556

)

$

(134,201

)

Add:

Income taxes

78

(101

)

—

244

(210

)

Interest expense, net

1,991

10,402

4,030

20,871

40,903

Depreciation, depletion and amortization

5,422

26,680

7,860

62,208

96,901

Accretion expense on obligations

2,286

1,879

2,345

8,596

7,653

(Gain) loss on derivatives, net

(47,617

)

(2,266

)

26,423

(17,406

)

(22,854

)

Cash settlements of matured commodity derivative contracts

(3,977

)

(99

)

(1,847

)

(4,265

)

(2,272

)

Non-cash equity-based compensation

83

976

1,144

5,011

4,266

Impairment of oil and natural gas properties

500

25,591

2,565

3,068

93,607

Non-cash oil inventory adjustment

(12

)

289

24

(192

)

713

Dry hole and exploration costs

113

223

21

299

413

Gain on sales of oil and natural gas properties

(650

)

(70

)

(28

)

(692

)

(981

)

Reorganization items, net (2)

543

—

972

589,648

—

Loss (gain) on equity securities

15,960

—

(4,830

)

11,130

—

Other income, net

—

—

—

—

(197

)

Adjusted EBITDAX (1)

$

8,987

$

23,183

$

28,919

$

91,964

$

83,741

Includes the effects of a royalty adjustment of $5.0 million in the three months and combined year ended December 31, 2018. See Note 13 of the Notes to Consolidated Financial Statements included under “Item 8. Financial Statements and Supplementary Data” contained in the Form 10-K filed March 29, 2019. Excluding this royalty adjustment, for the three months and combined year ended December 31, 2018, Adjusted EBITDAX would have been $14.0 million and $97.0 million, respectively.

Represent costs, gains and losses directly associated with the Company’s filing for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code since the petition date, and also includes adjustments to reflect the carrying value of certain liabilities subject to compromise at their estimated allowed claim amounts, as such adjustments are determined.

Reconciliation of Standardized Measure to PV-10 at December 31, 2018($ in millions)